Big OE back on the menu

The Great OE is back on. So don your backpack and jump on a plane.

That's the news from London-based recruitment guru Robert Walters who made a flying visit to New Zealand last month.

"Come on over. There are lots of jobs," says Walters, who runs an international firm with arms in the UK, Europe, Australasia and the Far East. "If you are a New Zealander wanting to get some experience in London, the market has changed radically from six months ago."

A year ago the usually booming recruitment market in London for Kiwi expats was dead in the water, says Walters, who was the founder of international recruitment agency Robert Walters. And that's probably an understatement. The phones simply stopped ringing almost overnight because the vast majority of clients had hiring freezes.

"Last year I wouldn't have advised anybody to come to the UK to find a job," says Walters.

"It has changed and it has changed very rapidly. Since the beginning of the year there has been a complete turnaround."

Ironically it's the banking sector, which was famously hit with tens of thousands of redundancies following the Lehman Brothers collapse in 2008 that is now screaming out for contractors.

The demand for contractors and temps in the banking industry, says Walters, is coming from the likes of RBS and Goldman Sachs that were firing people a year ago. "It's a fickle world in banking in London."

Now that supply is more limited, because people have moved on - or in the case of Kiwis, have kept away from London, contractors in particular and employees are in demand again. Credit Suisse confirmed to the Herald that it's hiring again in London.

Many companies fail to take into account the natural attrition that happens with their workforces - even in recessions," says Walters.

"People have babies, or get fired," he says, and the attrition results in a 15 to 20 per cent loss in staff year-on-year.

"So if you are not hiring you have a compound rate of 35 per cent per annum minimum staff reduction. You can't be a bank or a ball bearing company if that happens."

The sudden collapse in demand for both financial services and fast moving consumer goods staff, the areas the recruiter focuses on, had far-reaching effects. Robert Walters itself laid off about 500 people worldwide.

"Financial services collapsed and hiring just stopped," says Walters.

Only a very small number of jobs in specialist areas such as regulatory and audit were on offer.

"We were predicting a loss (for the first time in 25 years) although in the end we made a small profit," says Walters.

Throughout that time Walters said his staff kept networking and taking hiring managers and HR staff out to lunch even if they weren't hiring. The strategy was to make sure that when the turnaround happened, the company were ready for it.

In banking that turnaround started sometime around March or slightly earlier. It only takes one bank to start hiring for the lemming effect to take off and the rest follow. The problem is that they don't like to hire from the unemployed pool, which puts pressure on the job market.

"It's a natural, almost Darwinian concept," says Walters.

In the recruitment market - especially the international one - it takes time for word to get out, says Walters. And it will also take time for the antipodeans to start trickling back into London.

London's financial centre needs that to happen. "If you were to remove the New Zealand, Australian and South African component from the (banking workforce in London), there wouldn't be any banks," says Walters.

Walters knows from previous experience, having been through Big Bang (the sudden deregulation of London's financial markets in 1986) the 1987 stock market crash, the recession of 1991, and the 2001 Dot Bomb crash.

"We know when the market comes back there will be frenetic hiring.

"The difference this time around is Asia", which will compete even harder with London and other centres for staff.

"That is not a correctional thing, it is just the way the world is," says Walters. "We are seeing the growth in China and also Singapore, which is a very attractive place for banks to hub their operations." Likewise, Hong Kong's mergers and acquisitions business was growing.

Those Asian markets - in particular Singapore, Hong Kong and China have "gone ballistic" in recent months. These markets don't attract the backpacker who rocks up with $200 in his or her pocket. People move there for their careers.

Ironically it is many of the New Zealand-educated, Mandarin speaking, young Asian people who will be most sought after in those areas - despite sometimes struggling to get work here.

With good English and two years' experience under their belts, they'll be gold dust to recruiters. The gradual return to normality of overseas markets should be of concern to local employers, says Robert Walters' New Zealand managing director Richard Manthel.

New Zealand employers need to have their eye on the changes afoot in London and other centres. If London and other traditional destinations for the OE-brigade are back in business, corporates here could be hit with huge attrition rates.

Manthel says there is a likelihood that two years' worth of OE seekers could leave this year. "The Big Four (accountancy firms) and corporates need to be mindful of that. It could be a double whammy."

Many young Kiwis looking to do their OE in 2009 simply didn't go, says Manthel. They put their plans on hold. What that means is that both the class of 2009 and 2010 are likely to head offshore this year leaving a big hole in companies here.

At the same time, the stream of Kiwis returning home because they couldn't get work in the countries they were living in may dry up to a certain extent - although it is often life stages such as the children starting school that brings them home. This is unlikely to change.